Friends and foes: The dynamics of dual social structures

• Main Authors: SYTCH, Maxim, Adam TATARYNOWICZ
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: collaboration; conflict; litigation; networks; partnerships; Organizational Behavior and Theory; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/4858; https://ink.library.smu.edu.sg/context/lkcsb_research/article/5857/viewcontent/friendsandfoes.pdf
• Institution: Singapore Management University

This paper investigates the evolutionary dynamics of a dual social structure encompassing collaboration and conflict among corporate actors. We apply and advance structural balance theory to examine the formation of balanced and unbalanced dyadic and triadic structures, and to explore how these dynamics aggregate to shape the emergence of a global network. Our findings are threefold. First, we find that existing collaborative or conflictual relationships between two companies engender future relationships of the same type, but crowd out relationships of the different type. This results in (a) an increased likelihood of the formation of balanced (uniplex) relationships that combine multiple ties of either collaboration or conflict, and (b) a reduced likelihood of the formation of unbalanced (multiplex) relationships that combine collaboration and conflict between the same two firms. Second, we find that network formation is driven not by a pull toward balanced triads, but rather by a pull away from unbalanced triads. Third, we find that the observed micro-level dynamics of dyads and triads affect the structural segregation of the global network into two separate collaborative and conflictual segments of firms. Our empirical analyses used data on strategic partnerships and patent infringement and antitrust lawsuits in biotechnology and pharmaceuticals from 1996 to 2006.